Report on Accounting Information System: B. Baker's Business Needs

This report assesses the accounting information system (AIS) of B. Baker, a bakery business, comparing the inefficiencies of its current manual system with the benefits of implementing automated accounting software, such as MYOB. The report details B. Baker's business processes, including product distribution, production, and human resource management, highlighting the risks associated with manual accounting, such as errors and fraud. It emphasizes the need for indispensable processes like cost analysis, payroll automation, and financial statement preparation. The report outlines the positive outcomes achievable through automated systems, including increased sales, cost control, and improved demand forecasting. It further suggests features for the software, such as flexible financial processes, business insights, cloud architecture, and financial statement analysis, along with the importance of online accounting and inventory control. The report concludes by recommending software solutions and emphasizing the importance of cost analysis, data documentation, and performance comparison for B. Baker's success.

Running head: ACCOUNTING INFORMATION SYSTEM
Accounting information system
Name of the student
Student ID
Name of the university
Author note

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Table of Contents
Executive summary....................................................................................................................2
Introduction................................................................................................................................3
Question 1..................................................................................................................................4
Question 2..................................................................................................................................5
Question 3..................................................................................................................................7
Question 4..................................................................................................................................9
Answer 5..................................................................................................................................11
Conclusion................................................................................................................................15
Reference..................................................................................................................................16

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Executive summary
The main objective of this report is to state the importance of automated accounting software
in comparison with the manual system. This report will conduct a study regarding installation
of ERP software or the AIS. Various advantages of the AIS will be discussed under this
report. The report will take into consideration the advantages that can be achieved by B.
Baker through implementing the automated software for accounting like MYOB as per the
business process and requirements of the entity. The report will also focus on the positive
aspects of MYOB.

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Introduction
Accounting information system (AIS) is the structure that is used by the business for
collecting managing, storing, reporting or retrieving the financial data, so that it can be
utilised by the business analysts, consultants, accountants, auditors, chief financial officers,
tax agencies, regulatory authorities. Various components of accounting information system
are procedure and instructions, people, data, information technology infrastructure, internal
controls and software (Belfo and Trigo 2013). People in the AIS are generally the users of the
system. The professionals who are required to use the AIS are the consultants, accountants,
business analysts, managers, auditors and chief financial officers. Instruction and
procedures includes the methods that are used for storing, collecting, processing and
retrieving the data. These methods can be automated as well as manual and the data come
from both external as well as internal sources. Various data that are included in AIS is the
financial information regarding the business. For instance, the billing statements of the
customers, sales order, general ledger, vendor invoice and inventory data. Software of the
AIS is the programs of computer that is used to retrieving, analysing, processing and storing
the financial data of the company. Information technology infrastructure is the hardware
used for operating AIS. This hardware includes surge protectors, storage media, routers,
back-up for power supply, computers, printers and servers.
The internal controls with regard to AIS are the security strategies that it contains for
protecting the sensitive data. These securities can be complex as the biometric identification
or password protected. The AIS shall have control for protecting against the unauthorised
access to computers and limiting the access to the unauthorised users and the users who are
allowed to access a limited part only. Further, the AIS include confidential information that
includes not only the information of the company but also the information of the customers

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and employees. The data further includes the salary information, numbers of credit cards and
social security numbers. All the data under AIS shall be encrypted and access to system shall
be logged in such way that the activities shall be traceable.
Question 1
(a) Activities of Baker and business processes of the organization
Baker – a baker is a person whose job is making cakes or bread for selling propose or who
sells cakes and bread. On the other hand bakery is the place where floor based products is
baked in the oven and the products include the pastries, cakes, pies and bread (Galliers and
Leidner 2014).
The organization’s business procedures
From the given case study, it is found that B. Bakery performs various activities under
their business. The activities are as follows –
 Distribution of products – B. Baker carries out distribution procedures for various
products of their bakery. It is further recognised that the company uses various
distribution channel for selling their products.
 Production of the bakery related products – B. Baker trades in various products lke
baking of the bread and other related products. The USP (unique selling proposition)
of the products of the company is that they are concerned about the health issues and
take the required factors in consideration while producing their products (Grabski,
Leech and Schmidt 2012).
 Less efficient in considering the human resource management factors – it is
recognized from the case study that 70 employees are engaged in the company. As the
manual systems are used by the company for processing the monthly salaries, there

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exists a risk that the accounting department is not so efficient in managing the
accounting transactions related to the salaries.
 Conducting the business manually – the most crucial issue related to the business is
that it conducts most of the activities manually rather than conducting it through
computer system. Carrying out the activities through manually exposes the company
to the risk of fraud, error and misstatement.
Question 2
(b) Indispensable processes
It is identified from the case study that the company is making high profit from its
sells. However, as the company is following the manual system for its accounting
transactions, there is a high chance that the company will have to face the consequences of
fraud, error or misstatement owing to manual accounting system. Therefore, the company is
recommended to follow the following business procedures for carrying out the business more
transparently and as per the conceptual framework –
 Various outflow and inflow activities for proper evaluation of costs – as the bakery
industry is growing rapidly, to perform in better way the company must segregate its
various costs into different heads and allocate the costs into proper heads. Through
the manual system is is not possible and therefore, the company shall adopt the
automated software for accounting (Hopwood, Leiner and Young 2012).
 Preparing the pay-roll slips with the help of automated accounting software – as the
pay-roll structure are prepared by the company through manual system, there exists a
chance of misstatement, fraud or error. Therefore, to minimize the error the company
shall install the automated software for accounting

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 Annual reports and financial statements – publishing the annual reports and the
financial statements are the indispensable part of the business process as it assists the
users like shareholders, creditors, investors and potential investors to evaluate the
performance of the company over the years and compare it with the competitor of the
company (Hall 2012). Further, the annual report is used by the potential investors to
evaluate whether the company is profitable to invest their hard earned money or not.
Therefore, B. Baker shall start publishing their annual reports and financial statement
for the users to sustain in the competitive market.
 Determination of cost of manufacture – with manual processing system the company
will not be able to identify and allocating its cost of the manufacturing under proper
head, which in turn will have an impact on the determination of profit. Therefore, the
company shall adopt a proper system for cost. Further, it will determine the cost of
finished goods starting from the input of material.
(c) Outcomes required for achieving business objectives
If the above mentioned strategies are successfully adopted by B. Baker under their
business processes, they will be able to achieve the following positive outcomes –
 Enhancing the sales volume – when the company will be able to measure the cost of
sales, cost of production properly, it will be able to project its sales properly which in
turn will assist them to find out the loopholes and increase the level of sales. Further,
the appropriate pricing strategy, the entity will be able to enhance the sales level that
will have positive impact on the profitability of the company.
 Control on various operating costs – through implementation of appropriate
automated accounting system procedure the company will be able to identify various
costs related to operation of the business and various overhead costs. Further, the
company will be able to identify the most profitable and loss making units and

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decisions can be taken accordingly regarding which unit is to be eliminated. This will
enable the company to minimize the overhead cost and other operating cost (Soudani
2012).
 Forecasting of demand – if the automated system is implemented, the company will
be able to assess the supply and demand with proper forecasting of the demand, the
wastage of extra production can be eliminated.
Therefore, through implementation of automated business process, the B. Bakery can
achieve the above mentioned positive outcomes.
Question 3
(a) Possible features of software that can be considered by the company for achieving IT
investment
Efficient software system is required to perform various financial tasks of the
business. Further the system shall be efficient enough to analyse the performance of the
company and proper documentation of various accounting data like invoice to the debtors,
receipts from creditors and various other data related to the vendor. It must able to perform
the following tasks –
 Flexible and automated financial process – the modern system of general ledger is
more than just standard accounting chart. It enables the accountant to analyze, present
and manage the financial data in the way he wants without making it complex or
without using the tools related to external reporting (Weygandt, Kimmel and Kieso
2015). The new IT system shall be able to adapt the existing workflows and business
structure of the company instead of limiting the flexibility of business.

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 Business insight – the new IT system shall be able to provide real time and in-depth
insight to the business and shall allow the management to capitalize on the new
opportunities of business and identifying the requirement of correct action plan
(Pecchiar 2012). The management shall be provided with clear picture of the financial
performance from the underlying transactions to high-level summaries.
 Cloud architecture – the modern system of accounting is based on cloud system that
helps in minimising the technology related risks, reducing the IT related costs and
enhancing the productivity. It also assists in offering flexibility for selecting the best
class solutions. Further, it assists in selecting the appropriate software that will meet
the requirement of the business (Taipaleenmäki and Ikäheimo 2013).
 Analysis of financial statement – various software related to the accounting tasks shall
be implemented by the company for recording their financial transactions clearly and
transparently. As B. Baker does not have any proper software and record are
maintained on manual system, the software must assist them in maintaining the
records properly. It is suggested that the company can use the software like ERP,
DacEasy and MYOB (Li and Bai 2014). However, selecting the appropriate software
as per the requirement of the business has great impact on the business.
 Easy online accounting – in today’s competitive world, most of the organizations opt
for the online accounting transaction to keep them updated and make their financial
information available to the users. Further, the data shall be accumulated at one place
for easy access and decision making. Further, the inventory system and associated
activities shall be under proper control to protect it from unauthorised access, error or
misstatement. Implementation of software must have the positive impact on the
growth and performance of the company. Further, the software shall be able to
improve the organization’s internal control system.

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 Evaluation of different costs – as B. Baker carry on its activities manually they are
required to install software that will assist them to segregate the cost of manufacturing
the finished products into different heads and prepare the cost-sheet accordingly.
Once, the company is able to analyse its cost it will be find out which product is
profitable and which is not. Therefore, they can increase or decrease the production of
the products accordingly.
 Maintaining and documenting various data and compare – any small scale or large
scale firm to evaluate their performance, it must be compared with the relevant
competitor in the same industry. Further, unless the company maintains all the records
it will not be able to compare the performance with the competitor. As B. Baker
maintains all the records manually, it requires the software that will be able to
measure and compare the financial performance of the company with previous years
as well with the competitor. Moreover, the company must maintain the records related
to the debtors, vendors, creditors and distributors. Therefore, they must install the
automated accounting software to maintain all the required documents as per
requirements.
Therefore, it is recognized that B. Baker needs the software for various purposes. The
firm shall take into consideration all the required facts while implementing the software.
Question 4
a. Determination of appropriate software
Various software are available that can be used for performing the accounts related
task. B. Bakery can install any of them taking into consideration its business process and
requirement. Various software that can be used by the company are –

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 DacEasy (Sage DacEasy US 2016).
 SAP
 MYOB
The above mentioned software offer to perform various activities related to accounts.
Before implementing any of them, they must consider their requirements and the business
approaches.
b. Selection of adequate software related to accounting
 Accounting software with high end features – the accounting software with high end
features is suitable where the accounting process of the company is wide and
complex. High end software is in-build with various advanced technology to perform
and record the complex transactions (Iskandar 2015). Various big entities and
multinational companies install these types of software to maintain various records.
However, higher amount of cot is involved for installing this type of software and
further, the maintenance also involved high amount of cost as compared to medium
and small level of software. Further, it requires high level of expertise for
implementation and maintenance.
 Accounting software with medium end features – this type of software is used by the
entities whose main objective is to just meet their basic requirements for maintaining
their accounting records. The basic requirement can be fulfilled by the medium end
featured accounting software. This software is mainly used by the profit-earning
organizations for preparing the financial statements and maintaining the financial
records of the company. Therefore, most of the small scale and medium scale
organizations use the medium end featured software.
 Accounting software with low end features – this type of software is useful for the
business with less number of transactions and the start-up businesses. This software

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generally used by various professionals like doctors, lawyers or sole traders. As this
type of software cannot handle the complex type of transactions and are not properly
structured, this software is not widely used (MYOB Accounting System 2016).
Therefore, as per the business requirement B. Bakery can install the accounting software with
medium end features to satisfy their business requirements.
Answer 5
B Bakery, as a commercial enterprise, can avail different types of accounting
packages, which can be Xero, MYOB, DacEasy and others. As e result, it is of immense
implication for the enterprise to choose an appropriate software package according to its
requirements (Smith 2017). To compare between these software packages, several factors can
be considered which are namely, the ability of the software to record big number of
documents, expenses of operation, sustainability, risk, time scheduling, structures related to
the payment of the employees, complexities, sundry debtors and creditors and others (Jadhav
and Sonar 2009). The comparison among different types of the accounting software can be
shown as follows: